Are Banks Partners or Rivals in a Crisis
How open communication and clear plans defuse difficult situations.
When a business faces trouble, the bank is the last place where you want surprises. Yet exactly that happens time and again.
Numbers deteriorate and liquidity becomes tight. The entrepreneur hopes for improvement, postpones the discussion with the bank, and perhaps even polishes a metric or two. This continues until it is no longer sustainable. By then, trust is often destroyed before the first word is spoken.
Over the years, I have accompanied many companies through difficult phases. I have seen time and again that the way you handle the bank often decides between success and failure, far more than the naked numbers.
The Temptation of Silence
It usually begins harmlessly. A figure is not quite as good as expected, a project is delayed, or an investment costs more than planned. The entrepreneur thinks it is nothing dramatic and assumes they will catch up next quarter.
Yet as discrepancies pile up, the temptation to remain silent grows, or to present the situation better than it actually is. This does not happen out of bad intent but out of the hope that things will resolve themselves soon.
This is humanly understandable, but it is the greatest mistake you can make. When the bank learns the truth later, and they always do, the trust is gone. Without trust, every negotiation becomes difficult.
What Banks Actually Want
Banks are not adversaries, nor are they friends. They are partners with their own interests. They want their capital returned, and if possible, a little more. They want certainty that this will happen.
What banks do not want are surprises. They can handle bad news if it arrives in time. They can navigate a crisis alongside you if they are included. They can help if they understand what is happening.
What they cannot do is trust if they have been lied to. They will not provide capital if they feel the situation is out of control, and they will not accept being presented with a fait accompli.
The Art of Open Communication
In many conversations with entrepreneurs who have successfully mastered difficult phases, I see a clear pattern. They sought a dialogue with the bank early on, communicated openly about the situation, and presented realistic plans on how they intend to manage the crisis.
They also avoided one critical error. They never promised what they could not deliver. They never cited inaccurate numbers and they never set deadlines that were unrealistic.
This approach built trust, and trust created operational flexibility. The bank moved forward where it could have pulled back, and it helped where it could have terminated the agreement. This did not happen out of charity, but because they knew exactly where they stood.
What Remains
A crisis is no reason to remain silent. It is a reason to talk. The earlier, the more open, and the clearer, the better.
Those who take this to heart do not just have a greater chance of surviving the crisis. They also secure a better position for the period that follows because banks do not forget who treated them fairly during challenging times.
A question for you:
How openly do you communicate with your bank, even when it hurts?
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Great companies deserve a future. And every future begins with a clear decision. If you are currently reviewing your strategic options, give me a call. A brief, 20-minute call is a discreet, direct way to map out potential next steps.
Dr. Felix Tschopp
+41 79 303 33 31 | ft@tschoppgroup.com | tschoppgroup.com | LinkedIn